Auction is a centuries old process. Scale (quantity of product and number of attendees) and reach (distance buyers or goods travel to participate in the auction) remain key factors determining success of an event. The more valuable the item, the more unique its market, the greater the distance product and buyer travel to achieve needed scale. Certain commodities (such as valuable equipment, boats, trophy properties, general aviation aircraft) apparently well suited to auction processes are rarely sold that way because of difficulty of achieving scale and reach while retaining live auction elements necessary to attract buyers. This applies specifically in both large equipment and with luxury or unique items which do not travel easily, but has more general application as well.
Remarketing surplus products is a challenge for manufacturers and dealers in many industries, and in particular the equipment industry. Stale new inventory and “slightly used” product competes for customers with goods direct from the assembly lines. Equipment ownership and usage patterns have changed and continue to change. Whereas most new product was once sold to end users, now many industry segments deliver more than 65% of new product to “Rental/Lease Fleets”. Equipment sold is often guaranteed for its future value. Customers have transferred many elements of ownership risk to manufacturers and dealers by forcing sellers to provide rentals, leases, or future value guarantees. Consumer preference to rent is driven by a composite of factors including tighter lending standards, lack of tax incentives, increasing complexity and specialization of equipment, volatility of equipment values within their industries, and increasing availability and competitiveness of short term equipment rental solutions. Rentals, long term leases, and “buy back” agreements provide customers use of equipment without the ownership obligations or liabilities. Manufacturers and dealers remain “at risk” and responsible for rental, lease and “buy back” equipment until its ultimate sale. In view of these marketing techniques, as well as improvements in the useful life of a product, the burden or remarketing more of these products after their first substantial use remains with manufacturers, dealers and other rental operators. In many eases, the most severe competition for new sales is generated by identical “used product” rather than by new product of competitive manufacturers.
Manufacturers and dealers have achieved success generating sales of new products, but typically have less success remarketing used equipment and transferring ownership obligations to end users. “After market” remarketing specialists such as brokers, traders, import-export entrepreneurs and retail auctioneers provide needed expertise for second and subsequent sales of equipment. These remarketing specialists sell in direct competition to new products sold by dealers and manufacturers.
Due to the diverse demographics of their markets, and fractured communication among dealers, dealers' effectiveness is limited to small geographic areas in proximity to their dealership. Dealers have limited knowledge or success trading outside local trading areas. Manufacturers encourage “local” market focus. Whereas “local” focus for new equipment may be effective, remarketing surplus equipment locally limits potential and is largely an ineffective and costly strategy. At the same time, effort expended, travel costs, language, currency, cultural and information barriers plus lack of critical mass in any single market make venturing beyond local trade areas expensive, risky, inefficient, and often counterproductive for dealers. Accordingly, remarketing used equipment has been inefficient.
Conventionally, auctions of used equipment or the like require that the equipment be brought to the auction site and presented by the seller where the auction takes place. Additionally, all participants to the auction must assemble at the auction site. Such an auction, therefore, is typically limited to regional geographic areas due to the costs of assembling equipment as well as participants. Scale is crucial to auction success. Scale attracts buyers. The more buyers, the better the result. The more specialized the product, the greater the distance both buyer and product must travel for the auction to achieve scale or critical mass. Freight on large equipment is expensive, and moving equipment to an auction site and then removing the same equipment, if not sold, produces an inefficient non-value added expense. These expenses are further incurred by buyers traveling to auctions.
Similarly, auctions for expensive or unique goods (such as Art or Horses for example) will likewise receive significant benefit from the ability to less expensively bring scale to the auction (they do not have to move all of the goods to the auction site) and/or scale to the number of participants (they do not have to move all of the participants to the auction site). Advantages may be provided by a “real-time” auction information processing system which enables individuals dispersed over a wide geographic area to participate in an auction without gathering at the auction site. Advantages may also be provided by a system to allow individuals to participate in an auction without requiring a large investment in a technical infrastructure at the buyers'/bidders' remote locations.